Reservation on Issuing Overseas CB & BW

Financial authorities decided to reserve their plan to regulate the issuance and trading of overseas convertible bonds (CB) and bonds with subscription warrant (BW), which was planed due to the stock price manipulation crimes, such as `Lee Yong-Ho Gate`.

A high ranking official of the Financial Supervisory Commission (FSC) said yesterday, "Although there are certain problems in the issuance and trading of overseas CB and BW, it would be unfair to block an important fund raising route of entire corporations for some immoral companies` manipulation."

Thus, the FSC decided to abolish the existing system and search for alternative measures through the overall reexamination on the regulations that have been pursued.

The FSC has pursued the plan to regulate the issuance and trading of overseas CB and BW because domestic investors had performs illegal dealings in overseas bonds, which were revealed through various stock price manipulation crimes.

The FSC has prepared the following regulations; ▲ to ban domestic individual investors` trading of privately placed overseas CB ▲ to prohibit conversion of domestic investors` overseas CB and BW into stocks for 1 year ▲ to introduce minimum conversion price line of overseas bonds ▲ to reduce the numbers of adjustment of conversion and dealing prices.

After a comprehensive examination of the Korea Development Bank for expedient purchase of overseas CB. the FSC plans to prepare a final draft of reform through consultation with securities business sector and firms.

Byong-Ki Lee eye@donga.com